How to Repair Your Credit for a Mortgage

How does one repair a credit score? If you’re looking for help in this department of your financial profile, you’re in the right place. Before we start, I’d like to assure you that I understand. I know how you’re feeling right now, and there is help. Real help, not just the so-called schmoozey banter of the salesperson out to look for an easy buck, but the kind of help from someone who truly cares. Oh yeah, there really are people out there with no hidden agenda. These people enjoy helping others; there’s nothing like seeing your efforts “pay it forward” just because.

There’s no such thing as an “all-good” person; conversely, no such person as an “all-bad”, either. We’re all actually as a matter of degrees apart from one another. I personally have learned in my 64 years that how you treat others really do come back to you. So, you see, my friend, I really do have some valuable tips for helping you overcome bad credit – whatever the cause of how you got there.

I haven’t come by these alone, mind you. I’m paying it forward. Much of what I learned, outside of my own experiences, is from my trusted associate, Brian Decker. More on him and his associates later. For now, I’m rolling up my sleeves to give you the honest facts as I see them.

A credit score can range anywhere between 300 to 850. Generally speaking, you would need a minimum credit score of 600 to qualify for a car loan, for example. But this isn’t a hard-and-fast rule. Some lenders may require a higher score.

If you don’t meet the minimum requirement, they may deny you a loan and thus be unable to buy a car or home, or whatever. Sometimes, you can find a lender who will approve you for a loan with a credit score as low as 500. It all depends…

Repairing bad credit is much like losing weight. It took a lot of time to get here and frankly, there is no easy fix. If someone claims to have an easy fix, run! You need not have everything backfire before your very eyes, after all you’ve been through already. No, slow and steady, as they say, is the only solution.

Even if you’re in the group with so-called bad FICA scores, meaning, 600 or less. According to FICA, that’s Fair Isaac Corp, the average credit score reached a new high last year. Congrats to those of you who have recovered nicely from the recession!

But if you’re not part of that happy group – and I suspect you aren’t – no worries. It’s time to do something about it and as I mentioned, I have some valuable tips to quickly and efficiently increase your credit score.

Each buyer’s behavior evolves over time and when a lender or insurance company makes an inquiry into a person’s risk profile, they get a “snapshot” of that individual’s condition because it constantly shifts.

Each time a user opens a charge account their score changes. Each time a user misses a payment on a credit account, their score changes.

When a buyer pays off a debt, their score changes again. Over time, the exact number goes up and down a thousand times. What’s important to understand is where a person’s credit score is and what you can do to increase that score.

Here are some things you can do right now

1.       Set up payment reminders

Paying your bills on time is one of the biggest factors to maintaining good credit scores. It’s obvious, of course, but we’re all so busy these days, and it’s so easy to get sidetracked and forgetting to pay any bills, much less, any credit payment. Many banks offer payment reminders; simply go to your bank online and look for reminders. Once you set them up, you’ll get either an automatic email or text message alerting you that it’s time to pay your bill. Simple as that. If you prefer to get reminders via Google calendar or another phone app, it’s cool. Serves the same purpose. As long as you get a reminder, and when you get it, you pay it promptly.

Another thing you can do between your bank and credit card company is to enroll in automatic payments. Once set up, your payment will automatically be debited from your bank account. One thing to mention, though, is these automatic payments don’t really help much to instill any sense of having control of your money management. Therefore, you risk falling into this trap again because you haven’t developed a habit of managing your budget.

2.       Reduce the amount of debt you owe

To be honest, this can be tough! After all, your debt is the reason your credit scores are low. But think of how satisfying it will be when your debt is workable. Your first step is to put away your credit cards. Use your report to list all of your accounts. Go online to these accounts, or get your statement, and figure out how much you owe – and this is very important – find out what your interest rate is on each account. It might be difficult at first to find the rate you’re being charges. Look at the small print. Now that you’ve got all the data on each of your accounts, come up with an acceptable payment plan. Your first goal is to work on the account that carries the highest interest, not the largest account. While you’re paying down this first account, continue to pay the minimum payments on the rest. Once this first one clears up, focus on the second, and so on.  

3.       Clean up your credit report

Go to the website and request your credit report from the three big nationwide credit reporting companies. They are: Equifax, Experian, and TransUnion. Law entitles you to receive one free credit report each year. Be sure to print it out and put int in a safe place or save it to your computer.

Examine your reports very carefully. Look for any accounts that show a late payment or any unpaid bills. Compare this information with your notes, and if you find anything inaccurate, file a dispute immediately. The report should explain how to do that.

Whether you’re worried about your credit score or not, you should make it a yearly habit to review your credit reports just as a matter of protocols. These reports not only affect your credit score, but they can impact any job prospects you may have since many prospective employers often check these out before hiring anyone.

4.       Pay twice every month

Did you know that your credit card companies are reporting to the credit bureaus only one a month? So what, you say. Well, if you are actively using this card, and you pay off the balance each month, you might not see an issue.  

Allow me to explain this problem with an example. Let’s say you have a card with a $1000 credit limit. Maybe it’s one of those rewards cards and you like using it for everything throughout the month. So, you max it out every month. When you get your statement, you pay the $1000, no problem. Since the credit card company reports it only once a month, it looks like this on paper: Your limit is $1000, and your balance is $1000. Interpretation: you’re at a 100% credit utilization rate!

What to do? Break up your payments. Charge as usual, but send in a minimum of twice a month. This will keep your running balance low.  

5.       Increase your credit limit

Perhaps paying down your balances are simply not in the cards right now. No worries, I understand. Even still, there are other options that may be more practical for you to consider at this time. Such as calling your creditor and requesting a credit limit increase. WHAT – you say? Yep, here’s how this works. Using our previous example, you maxed your card to the limit at $1000.

If you get an increase to be at $2000, then you’ve immediately cut your credit utilization in half. Now, here’s the catch: you cannot use a penny of that new credit. Not one cent. Why? Because doing so will defeat the purpose of getting that increase, because you’re back at a maxed out credit score.

6.       Open a new account

Ok, so, you tried to get your credit limit increased. Didn’t work. The credit card issuer refused. No worries. Apply for a different card! From a different issuer that is. Opening a new account will do the same trick; it will help your credit utilization rate because that rate is based on all open lines of credit and the total sum of balances.

So, let’s say your total lines of credit is $10,000 and you owe $5,000. You have a 50% credit utilization rate, no matter if it’s on one card or ten. Be careful, though. Opening a bunch of accounts will send up a red flag to your creditors. Just one or two is fine; otherwise it appears you’re getting ready to go on a desperate spending spree. Check out Money Talks News credit card search tool – it’s free.  

7.       Negotiate outstanding balances

If your low score is because of having to go through collections, here’s a tip. Do a little damage control by learning how to negotiate your debt. You will not wipe out your debt altogether, but there are some things you can be doing. Go to to find out more options for you. They offer a great primer on the steps you can take. If you do try any of them, be sure you get everything in writing.

Know that paying off a collection account will not remove it from your credit report: it will stay on your report for seven years.

If you absolutely see no money to offer a creditor as a settlement, you need to look around and consider selling some of your stuff. Check out Craig’s List or Ebay, or even garage sales and local swap meets.

If you are having trouble making ends meet, contact your creditors or see a legitimate credit counselor. This won’t rebuild your credit score immediately, but if you can begin to manage your credit and pay on time, your score should increase over time. And seeking assistance from a credit counseling service will not hurt your FICO Scores.

8.       Become an authorized user

So, you’ve read through this list, have tried them, and still can’t find any relief? There’s still one more option to try. Get added to someone else’s credit card account as an authorized user. Yep, this can be pretty tough to do, but it’s worth a try. For this to work, however, you need to approach one type of person. Thery must have these 2 qualities. First, they must love you. Second, they must have a pristine credit score. Once you’ve got this person, and you’ve convinced him or her that you will not use the card, meaning, purchase anything with this card, tell them the following. You wish to use their card to help build up your credit and it will not affect their score or balance.

By being added to your account, their good credit score will show up and suddenly, your credit rating is will get a tremendous boost. Now that you have a little breather, continue paying those cards down.

Remember, don’t expect change too soon. It took you time to get here and will require time to clean it up. Give yourself a full three months of working faithfully to build up your credit score again.

Do your rate shopping for a given loan within a focused period: FICO Scores distinguish between a search for a single loan and a search for many new credit lines, in part by the time over which inquiries occur.

Re-establish your credit history if you have had problems: opening new accounts responsibly and paying them off on time will raise your credit score in the long term.

Note that it’s OK to request and check your own credit report: this won’t affect a score, as long as you order your credit report directly from the credit reporting agency or through an organization authorized to provide credit reports to consumers

Finally, here’s a few tidbits to consider:

Keep balances low on credit cards and other revolving credit: high outstanding debt can affect a credit score. Pay off debt rather than moving it around: the most powerful way to improve your credit scores in this area is by paying down your revolving (credit cards) debt. In fact, owing the same amount but having fewer open accounts may lower your scores.

Don’t close unused credit cards as a short-term strategy to raise your scores. Don’t open several new credit cards that you don’t need, just to increase your available credit: this approach could backfire and actually lower your credit scores.

Apply for and open new credit accounts only as needed: don’t open accounts just to have a better credit mix – it probably won’t raise your credit score.

Have credit cards – but manage them responsibly: having credit cards and installment loans (and paying timely payments) will rebuild your credit scores. Someone with no credit cards, for example, is a higher risk than someone who managed their credit cards responsibly.

Note that closing an account doesn’t make it go away: a closed account will still show up on your credit report and may be considered by a score.

To summarize, “fixing” a credit score is more about fixing errors in your credit history (if they exist) and then following helpful guidelines to maintain a consistent, good credit history. Raising your scores after a poor mark on your report or building credit for the first time will take patience and discipline.

If you cut up your credit cards when you were having financial difficulties, good for you. Getting rid of credit cards can be difficult. Plus, it can even be a hardship, because you no longer have the convenience of ordering items online that aren’t available in stores, or reserving hotel rooms or rental cars.

But once you feel you have conquered the problem that got you into the mess in the first place, it might be hard to get a bank to give you a credit card, based on your credit history. And you need to get one and make payments on time to show you have changed your ways and you are now worthy of a car or home loan. 

At the start of this article, I mention a trusted associate and promised I’d get back to him. Brian Decker of Brian Decker Mortgage, has funded over 6,000 loans in his 15-year career,  which is 10 times the amount a normal loan officer does. He’s the top loan officer for first-time homebuyers in California three years in a row. He finished twelfth in the US for closed loans out of 300k loan officers. Brian and his staff funded over $200M in one year. For three years in a row, 2016, 2017, and 2018, respectively, Brian has had more than five-star reviews than any other licensed loan officer in California. If you need any help or have questions about anything in the article, please don’t hesitate to call his office. These are the kind of folks you need on your side. Go ahead, call them.


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